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Obama says 'no' to legalizing pot

In Colorado, lawmakers on a pot legalization panel met Friday to brainstorm how to tax it. The voter-approved November ballot initiative called for an excise tax of no more than 15 percent but didn’t specify a levy. Last week, a statewide task force on legalization recommended they levy an excise tax and a sales tax of up to 25 percent.

Colorado’s task force also advised Gov. John Hickenlooper and Colorado’s congressional delegation to push for a federal tax code modification in Washington, D.C., that would allow the state’s marijuana businesses to claim tax deductions. Companies selling illegal substances are currently barred from receiving federal deductions and credits.

Under Colorado’s constitution, voters will have to approve whatever statute lawmakers come up with in the state’s November 2013 elections.

The Colorado Center on Law and Policy last August estimated that legalization would bring in $24 million in excise tax revenue, $8.7 million in state sales tax revenue and $14.5 million in local tax revenue.

Washington’s Office of Financial Management estimates that marijuana revenues levied on growers, processors and retailers will bring in just over $565 million in 2017.

Plus, the state’s legislators are questioning whether they need to tax medicinal marijuana, which is currently tax-free, to keep people from claiming illness to get a better price.

Rep. Dave Reichert, a Washington Republican whose mother took a pill form of cannabis to ease pancreatic cancer pains during the last weeks of her life, said the debate exemplifies just how little his state thought through legalizing and taxing marijuana. Reichert opposes recreational-use legalization.

Then, there’s the question of how much it will cost to regulate the newly legalized recreational drug — an expense that will likely come from marijuana taxes themselves.

That’s where Reichert, a former cop, sees an issue.

“I don't think the revenue they raise will be near enough to cover the cost of regulating pot stores,” he told POLITICO. “What I’m hearing from the police chiefs and sheriffs is that this is going to cost us more money to monitor those rules and regulations.”

Although Colorado and Washington are the only states to have legalized recreational marijuana use so far, others could follow. Oregonians defeated a marijuana legalization ballot measure last November, but lawmakers there will hear testimony next week on a proposal legalizing and taxing pot at $35 per ounce, with supporters saying new revenue will beef up money for schools and mental health programs.

And someday, there could be movement on the national level. Polis and Rep. Earl Blumenauer (D-Ore.) have introduced bills that ease federal laws on marijuana, as did former Reps. Ron Paul (R-Texas) and Barney Frank (D-Mass.) before them. And Paul’s son Sen. Rand Paul (R-Ky.) called this week for a reduction in the penalties for recreational marijuana use.

"There are a lot of young people who do this, and then later on in their twenties they grow up and get married and they quit doing things like this,” he told Chris Wallace on "Fox News Sunday." “I don't want to put them in jail and ruin their lives."

This article first appeared on POLITICO Pro at 5:08 p.m. on March 27, 2013.